Military pension reform bill expected tomorrow

The Presidential Office’s Pension Reform Committee is to announce proposals to reform military pensions tomorrow, officials with knowledge of the process said yesterday, as they disclosed key details of the proposal.

Once the bill is made public, the Ministry of National Defense will immediately present it to the Executive Yuan, said the officials, speaking on condition of anonymity.

The government expects the Executive Yuan to approve the proposal without changes and submit it to the legislature on the same day, they said.

Under the proposal, the 18 percent preferential interest rate on pension savings accounts would be left untouched for retired military personnel whose monthly income is less than NT$32,160, they said.

Retired veterans who served for 20 or more years would receive a monthly pension equal to 50 percent of their monthly base pay, they said.

For each year of service beyond the first 20 years, an additional 2.5 percent would be added to monthly pension payments up to a maximum of 100 percent for veterans who served for more than 40 years, they said.

The bonus scheme is modeled after the US armed forces’ pension policy and is intended to encourage troop retention, they said.

The committee decided to preserve the 18 percent preferential savings rate for veterans with monthly incomes under NT$32,160 to establish a social floor for economically disadvantaged veterans, they said.

The upper monthly income limit to qualify for the 18 percent preferential savings rate was chosen to ensure that retired civil servants and veterans would be treated equally, they said.

For the remainder of military veterans, the 18 percent preferential savings rate would be phased out over two years, the officials said, adding that the decision was made to solve the controversial issue in a manner that the Legislative Yuan would approve of.

Lawmakers have previously cut the government-proposed six-year sunset period for the 18 percent savings rate for civil servants to two years, they added.

By giving veterans of more than 20 years a pension equal to half their final monthly pay, the committee is proposing a pension system that would reward long-serving troops, they said.

The Ministry of National Defense had lobbied for a scheme that rewards troops along similar lines, but would start at 60 percent of the last monthly income and would include a seniority bonus of 2 percent for every year of service beyond the first 20, they said.

The committee rejected the ministry’s proposal because it could create an unfair pension system that excessively favors military veterans over retired civil servants, they said.

The committee also rejected a proposal by Veterans Affairs Council Director Lee Shying-jow (李翔宙) for the same reason, the officials said.

Lee’s proposal would have seen the 18 percent preferential savings rate preserved for retired veterans whose monthly income is less than NT$40,000, they said.

Under the old system, personnel enrolled in the military pension scheme were required to make regular contributions to the pension fund, unlike the US military pension system that the committee is emulating, the officials said.

The committee has been working on a double-track system that would allow for the legacy pension programs to survive while the rest of the armed forces would switch to the new system, they said.